Under Pressure: Cultural and Structure as Antecedents of Organizational Misconduct

Abstract

Does toxic organizational culture lead to misconduct? To address this question, we build on Merton's strain theory and theorize the relationship between organizational culture, structure and misconduct. We first argue that organizations with cultures characterized by strong performance pressure are more likely to engage in misconduct. Then we consider how organizational structure moderates this relationship, and hypothesize that in more formalized organization this relationship is weaker, while it is stronger in more decentralized organizations. To test these hypotheses, we use natural language processing to identify cultural content in Glassdoor employee reviews of 880 publicly traded firms combined with official penalties due to misconduct provided by Good Jobs First. The empirical results lend support to our hypotheses. Organizations with high performance pressure cultures are 65% more likely to be fined for misconduct than organizations with low pressure. The moderation effects of the organizational structure are also supported.